E&B’s Client Prevails as Dallas Federal Court Enters Two Orders in Jurisdictional Fight

C.A. No. 3:14-CV-2689; Tudor Insurance Company and Lexington Insurance Company v. Ocotillo Real Estate Investment I, LLC d/b/a Longhorn Self-Storage; In the U.S. District Court for Northern District of Texas, Dallas Division

C.A. No.: 3:14-CV-03259-P; Ocotillo Real Estate Investment I, LLC d/b/a Longhorn Self-Storage v. Lexington Insurance Company, Tudor Insurance Company, All Risk, Ltd; Bigham-Kliewer Insurance Agency Inc. d/b/a Bigham Kliewer Chapman & Watts Insurance Agency; and Carrie K. Hensley; In the U.S. District Court for Northern District of Texas, Dallas Division

On January 9, 2015, a U.S. District Court Judge entered orders in companion lawsuits stemming from a first-party property insurance dispute. The property owner had submitted multiple notices of loss to multiple insurance carriers, claiming hail damage to its roofs. Following a settlement with one of the carriers, the owner threatened litigation against two additional carriers which had insured the property during subsequent policy periods. In response, the carriers filed a declaratory judgment action in federal court seeking declarations that they did not owe indemnification to the owner because there was no loss during their respective policy periods. One week later, the owner filed an action in state court, alleging breach of contract, common law bad faith, and various statutory violations against the carriers and several procuring agents. The insured/owner also moved to dismiss the first-filed declaratory judgment action as an improper anticipatory filing made for the purpose of improper forum shopping. The carriers subsequently removed the second-filed state court action based on fraudulent joinder of the procuring agents, and the insured/owner in turn moved to remand.

In finding that the procuring agents were improperly joined in the removed state court matter, the Court applied Texas pleading standards and held that the plaintiff/insured failed to plead specific facts which would support the theories of recovery stated in its petition because any claims against the procuring agents were barred by limitations. As a result, the Court denied the insured’s motion to remand the second-filed state court action. In a separate order, the Court, after a thorough review of the non-exclusive Trejo factors first enunciated in St. Paul Ins. Co. v. Trejo, 39 F.3d 585 (5th Cir. 1994), and based in part on the fact that a competing state court action no longer existed following denial of the motion to remand, also denied the insured’s/owner’s motion to dismiss the first-filed declaratory judgment action.

You can view the full text of both orders here and here . For additional information, please contact E&B attorneys Ray Gregory, Bill Eggleston, and Luke Fraser.

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